Hike rates

Bank of England pill ready to raise rates faster

The Bank of England has raised rates five times in a row. Photo: Peter Nicholls/Reuters

bank of england Chief Economist Huw Pill is ready to vote on raising interest rates at a faster pace if needed to fight inflation.

The BoE maintained its series of gradual increases in borrowing costs, raising rates by 25 basis points to 1.25%.

“The statement both reflects my desire to adopt a faster pace of tightening than has been implemented so far in this tightening cycle, while simultaneously underscoring the conditionality of such a change,” Pill said in a speech at a central banking conference organized by the King’s Business School.

UK interest rates

UK interest rates

Read more: Bank of England ready to act more forcefully on interest rates, says Bailey

Threadneedle Street now expects inflation to top 11% and markets are betting there is an 80% chance it will hike rates by 50 basis points in August.

“Much remains to be resolved before we vote on our August policy decision. How I vote on this occasion will be determined by the data we see and my interpretation of it,” he added.

Pill described soaring inflation as a “very unsatisfactory situation” which was hurting British households, struggling with the Cost of life.

“We recognize the challenges associated with high inflation rates. For those who spend a higher proportion of their income on energy and food – unfortunately a particularly large group among the less well-off – recent price increases have imposed a sharp squeeze on their real incomes. These are tough times for a lot of people,” he said.

UK inflation hits record highs

UK inflation hits record highs

Deputy Governor Jon Cunliffe also doubled down on the Bank of England’s pledge to fight inflation, saying it would do “whatever is necessary”.

He told BBC Radio 4: “We will act and we will act forcefully. We will use these tools to ensure that the economic conditions are not one in which inflation becomes entrenched.”

Read more: Bank of England issues dire forecast for UK: Expect more pain and misery

Last month, the BoE’s monetary policy committee said it was ready to act forcefully if needed to tackle inflation that is expected to hit double digits later this year.

A 50 basis point hike next month would be the biggest since the Bank’s independence in 1997.

Watch: How does inflation affect interest rates?